pandora_logoPandora Media, Inc. (Symbol: P) has taken a giant hit in recent times from its 52-week high of $26 a share. Now even while trading for roughly $10 a share, it’s hard for me to justify buying into the stock.

Let me start out by saying, I personally use Pandora – a lot, but my overall usage has been on the decline – so I might be a bit bias. For those of you not familiar with Pandora, Pandora is a internet radio website that allows users to select artists they prefer to listen to and Pandora will then recommend more music (in addition to playing the selected artists) to the user based off an algorithm using the artists selected.

I would argue that Pandora was first to take this concept and really get traction with it, but they will not be the last. Since Pandora’s success there has been many companies and radio stations (such as Spotify, Sirius XM Radio, and even individual radio stations like iHeartRadio) that are determined to cash in on this service.

Before going any further – let’s talk fundamentals.

EPS: –$0.22
Market Cap: 1.62B
P/E:  N/A (EPS is negative)

Now let’s talk about What Pandora has going for it.

  • Pandora was the first to get traction
  • Pandora has a large audience
  • Pandora is now implementing more advertising (Which leads to more revenues)

But what about the downsides of Pandora.

  • More competition
  • Adding advertisements can lose audiences
  • EPS is negative
  • It’s very possible that Pandora was a trend, now on the decline
  • More people using online services such as Google Music

Final thoughts:

This stock is a hail mary, sure it could explode and be a giant player – but until they start showing profits it’s a fundamentally weak stock. I don’t personally have a large enough money to dabbing in this stock but I think anyone who had a substantial portion of their portfolio in this stock would be completely reckless. Could this stock be worth 5, 10, or 25 more than its currently valued at? Of course, but it also could never turn a real profit and spend away whatever it does make on development.  I foresee Pandora offering completely new services and expanding while it tries to turn a profit on its already existing services. I think this stock has a realistic chance of being on the decline unless they can should warranted profits soon.

Disclaimer: This an opinion only – Consult a professional financial advisor and assess all risks before investment.

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